Home > Property & Casualty > FBI’s probe for potential insider trading has hedge funds concerned

FBI’s probe for potential insider trading has hedge funds concerned

When the FBI stormed the offices of Level Global Investors, Diamondback Capital and Loch Capital earlier this week, it triggered concern on the part of hedge funds that regulators are increasing the intensity of their scrutiny of the industry. These recent more aggressive regulatory efforts have also increased the level of concern of many hedge fund executives with respect to their liability. As executives focus on their liability, they are also now focusing on how (and if) their insurance will protect them.

The insurance policy garnering their attention is broadly referred to as General Partnership Liability. This policy is designed to provide both Directors’ & Officers’ as well as Errors & Omissions Liability when general partners, advisers, directors, members, officer, et al, of the funds are accused of “wrongful acts”, in addition to settlements. While it is not intended to cover criminal charges directly, a well scripted policy should provide defense costs and coverage for some of the regulatory actions.

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William Gallagher Associates is a leading provider of insurance brokerage, risk management and employee benefits services to firms with complex risks and dynamic needs, within industries that include technology, life sciences, financial risks, health care, renewable energy & clean technology, and environmental services. WGA has offices in Boston, MA; New York, NY; Hartford, CT; Princeton, NJ; Columbia, MD; and Atlanta, GA.

  1. June 21, 2011 at 11:31 am

    Zvi Goffer was found guilty of insider trading in the latest victory for the governement in a sweeping crackdown on insuider trading at hedge funds. New York Times report: http://www.wgains.com/assets/attachments/NYTZviGoffer.pdf

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